Myth-Busters: How Government Messes Up Market Prices

Prices are the lifeblood of a market economy. They convey important and valuable information that everyone uses to make decisions on how to allocate resources. Prices alert us to the supply and demand of any particular item or service in the economy. It’s crucial that prices be accurate so that the best and most rational decisions can be made. In order to be accurate, prices must be left alone. When government intervenes, it turns accurate information into lies. It distorts how resources are allocated, creating massive imbalances in the economy. Then in a vicious cycle, government seeks to correct its previous meddling with even more interventions.